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Table of Contents Select a Title Below to View the Article
12 Cover Story Texas Real Estate Investors Unite in San Antonio By Victor Maas “you can make more in real estate than practicing law." Victor
Letter
10
47 Mortgage Free
16
52 Becoming Your Own Banker
21
56 Many US Communities
From the Publisher By Linda Pliagas
BEST KEPT SECRETS
To Get More Motivated Sellers Contacting You By Kathy Kennebrook
Understanding
the Mindset of the Investor By Leonard Rosen
Tips For Success
with The Infinite Banking Concept™ By James Neathery
Seeing Real Estate Inventory and Lead Shortage By Leon McKenzie
25 63 Solo 401k
By Michael Poggi
A Tax Saving Strategy for Real Estate Investors By Jean NortonDmitriy Fomichenko
30 69 Here's the Capital You Need
Making the Decision
To Control Your Money (Chapter 1 Part 2) By Rebecca Rice
By Dana Bersch
36 74 Experts to Discuss California’ s
7 Personal Finance Questions
to Ask Yourself Before Getting a Mortgage By Dr. Teresa R. Martin
The Flip Side
Real Estate By Matthew Pillmore
42
Of Private Lending By Sensei Gilliland
Real Estate Bubble
and Digital Disruption at Charity Event Organized by The Norris Group By Aaron Norris
79 Skyrocketing Inflation, Rents, and Home Prices By Rick Tobin
LINDA PLIAGAS
H
ello Friends of REI WEALTH;
Thanks for joining us for another informative issue. For nearly three years, REI WEALTH has provided investors around the world with timely, thoughtprovoking articles; stories written from top investors from around the nation. Our environmentallyfriendly resource guide is designed to inspire hopeful investors, as well as teach even the most sophisticated landlords a lesson or two. My partner, Noland Araracap, a real estate investor based in San Diego, had a vision to reach investors around the world. It is an honor and pleasure to continue his initial dream and inspiration. I often meet our readers in person when we host events in different cities, and it's amazing to get to know our fans firsthand.
LINDA PLIAGAS
The friendships that have blossomed out of this business have been really incredible. I'm certainly much richer because of REI WEALTH thanks to all the people I've met along the way. Our team, scattered around the world in California, Florida, Nevada, Missouri, and the Philippines wish you all the best with your investment endeavors. Until next time, Linda Pliagas copublisher
Linda Pliagas Linda Pliagas has studied and worked in both media and real estate for nearly twenty years. Linda holds a bachelor’s degree in print journalism from California State University, Long Beach. She was a recipient of the Bobit Magazine Scholarship for her accomplishment in publishing her first national magazine while still at CSULB in 1993. Her first national publication, distributed into bookstores across the country, gave her a national spotlight and forum at the age of 25. She was featured in the Los Angeles Times, Wall Street Journal, Santa Monica News, among others. She began her realty career 17 years ago as a broker’s assistant to a young broker who became a multimillionaire by age 29 fixing and flipping homes. When they worked together, he was a seminar devotee and took educational training around the nation with some of the greatest masters in the industry, many who are now featured in this publication! She kept a close ear to his teachings, obtained her real estate license, and began to focus more on the investing side of the real estate industry. Soon, Linda began to help her family, friends and colleagues also invest in rental properties, particularly out of state. Linda has been a licensed real estate agent for over 16 years. A journalist since the age of 18, Linda Pliagas has also worked and freelanced for numerous national magazines, local newspapers and online news websites.
TEXAS REAL ESTATE INVESTORS UNITE IN SAN ANTONIO VICTOR MAAS
Texas Real Estate Investors
Unite in San Antonio You might be in real estate for yourself, but you don’t have to invest by yourself
By Victor Maas
W
hether you are still sitting on the sidelines looking for a way onto the real estate investment playing field, or you’ve been doing deals for years; you already know that there can be a fair amount of challenges. Maybe that is finding the money to get started. Or it could be finding a creative
TEXAS REAL ESTATE INVESTORS UNITE IN SAN ANTONIO VICTOR MAAS
way to structure a tricky deal with big profit potential, getting help in ensuring a buyer or seller lives up to their agreement, or simply finding a smarter way to scale lead generation and deal flow. Regardless of how high your IQ is, or how hard you are willing to work at it, all of these hurdles are far more easily overcome with the help of others who have the contacts or experience, and have been there before. Texas real estate investors have been uniting together for their success thanks to SAREIA. President of the San Antonio Real Estate Investors Association, Victor Maas, is a self described “problem solver.” Since 2002, SAREIA has been leading the biggest REIA in South Texas, helping members realize more of their goals and connecting them together to exponentially accelerate their results. Victor Maas knows all too well about the challenges of working your way up to make your dreams happen, and overcoming the challenges of entering a new market, profession, or business. Victor is a selfmade success who essentially found himself in the U.S. on his own to make his own American Dream happen for himself. He appears to have done pretty well at that. Today he is a lawyer, real estate broker, investor, coach, and SAREIA president. Victor clearly does have to juggle some of these roles. It is a choice. He doesn’t want others to have to go at it alone, and of course together there are plenty of rewards in going bigger in the property industry. In fact, Victor Maas is one of a growing number of attorneys who have been making the leap, or at least have been adding real estate investment, as “you can make more in real estate than practicing law.” It certainly pays to have a coach, mentor, and association president who has both this breadth and depth of expertise. Through SAREIA, members will find advanced help with real estate contracts, law, dealing with probate situations, finding sellers, title issues, and business formation. Victor speaks Spanish too, which is virtually a must when doing business in Texas, and could be a great value added bonus for those who aren’t bilingual.
TEXAS REAL ESTATE INVESTORS UNITE IN SAN ANTONIO VICTOR MAAS
SAREIA offers a variety of opportunities, which include the benefit of Victor’s experience and connecting with other Texas real estate investors. This is anchored by monthly meetings on the first Tuesday of the month in San Antonio. Then there are Boot Camps and Bus Tours, a mentorship program, lunch and learn events to advance your real estate marketing and creative financing skills, plus SAFIRE. SAFIRE is the San Antonio Female Investors in Real Estate group. The big difference you’ll notice at SAREIA from other real estate education, training, and coaching options is the action. Even at monthly meetups you’ll get time to ask questions and get them answered, and do some real networking versus sitting and just listen to a lecture or sales pitch. Other events get investors out in the field for hands on property scouting and deal making. Looking forward, Victor says there are plenty of real estate deals to be done whether you are prehabbing, wholesaling, putting together JVs, or are seeking income properties. Find out more about the Texas real estate landscape, SAREIA, and Texas real estate forms right online at www.SAREIA.com.
BEST KEPT SECRETS TO GET MORE MOTIVATED SELLERS CONTACTING YOU KATHY KENNEBROOK
BEST KEPT SECRETS TO GET MORE MOTIVATED SELLERS CONTACTING YOU By Kathy Kennebrook (The Marketing Magic Lady)
G
etting motivated sellers to contact you first is essential to any successful Real Estate Investor’s business. A truly motivated seller is the key to a good deal; the more motivated the seller, the better the deal. You will find very quickly, as I did, that you will be able to buy a lot more houses at much
better prices if you target the right sellers. You will also get the terms you want when the seller contacts you first, especially in some of today’s really hot real estate markets. You’ll want to target the kind of sellers who truly need to sell as opposed to those who just want to sell, including those sellers in preforeclosure.
BEST KEPT SECRETS TO GET MORE MOTIVATED SELLERS CONTACTING YOU KATHY KENNEBROOK
Marketing to sellers is also a numbers’ game. The more motivated sellers you are able to locate, the more motivated sellers you will have contacting you, and the more opportunities you’ll have to make good deals. The secret is in learning how to find the truly motivated sellers. Whom exactly are you going to be marketing to? Motivation comes in many forms. Sellers need to sell for a variety of reasons. Some reasons have to do with the sellers themselves, such as age, health status, job situations, personal situations, financial
I also find that these mailings are very residual. These
difficulties, change in family size or change in marital
potential sellers will hold onto your direct mail pieces
status.
until their circumstances dictate that they contact you, especially since they probably have not had any
Other reasons might have to do with the property
contact from anyone else, because usually their
itself, such as an estate, a property that needs too
properties are not being actively marketed.
much work, or a property that has been vacant for a significant period of time. This would also include
Since they are not being actively marketed, there is
land lords who have simply had enough of tenants
virtually no competition for these deals. And… if you
damaging their properties over and over again.
take the time to actively follow up with your direct mail campaigns and with your sellers, these sellers will
So how do you find these sellers and how should
contact you first when they need to sell, even if they
you market to them? The best way I’ve found to do
have been contacted by someone else in the
this is by using at least three to five different
meantime.
marketing strategies at all times. One of the multi pronged marketing approaches is the proper use of
This makes it even easier for you to make a good
direct mail to reach these very motivated sellers. You
deal. In addition, during the time you have been
always want to be reaching your market in a variety
mailing sequentially to these potential sellers, you
of different ways to draw the highest number of
continue to build credibility with them. This will give
motivated sellers to you.
you a significant advantage over your competition, since these sellers feel they already have a
The BIG secret to effective direct mail campaigns is to use
“relationship” with you.
them over and over to the same potential sellers. As you will quickly discover, given time, almost every potential
The biggest part of the secret is to find the sellers
sellers’ circumstances change and make them more ready
who really want to sell. I use different direct mail
to sell.
campaigns to successfully locate several types of
BEST KEPT SECRETS TO GET MORE MOTIVATED SELLERS CONTACTING YOU KATHY KENNEBROOK
motivated sellers depending on what kind of deals I am specifically looking for in my business. The best way for you to build your business quickly is to use a number of different methods to draw motivated sellers simultaneously. This can best be done by locating mailing lists and refining them to meet your specific criteria, and then mail to them over and over, cleaning your lists as you go. I find that I get the best results by mailing to my lists at least every sixty to ninety days. This is very easy to do if you implement a follow up system which will help you to track your mailings and your deals. You’ll also quickly discover that different types of direct mail pieces and lists work better in some parts of the country than in others. Some of these lists might include mailings to out of state property owners, burned out land lords, quit claim deeds, military transfers, estates or preforeclosures. These are all sources of highly motivated sellers. Be sure to give your potential sellers several different ways to contact you such as mail, email, fax, phone and a website. The more ways you give these sellers to contact you, the more of them will contact you, especially when you make it more convenient for them by giving them several ways to reach you. This way they can contact you in the way that is the most comfortable for them and at their convenience. When you learn how to get motivated sellers contacting you and then learn how to purchase properties using a number of different methods, the possibilities become almost endless. If you use several different methods to get motivated sellers contacting you, you will have more opportunities than you can even imagine. You get to pick and choose the deals that you want to do! Because you get to pick and choose the deals you want to do, you can also pick the exit strategy that most suits your needs, such as wholesaling, renting, selling or lease/options. There is no other marketing strategy that gives you this much control over your deals. In addition, in today’s market, since so many
folks
are
focused
on
pre
foreclosures, there is a whole other market of sellers who need our help as well, like divorces, estates and probate, military transfers, burned out landlords and Spanish Speaking homeowners. These are just a few of the types of sellers we need to be concentrating on to create great deals, including those that come with owner financing.
BEST KEPT SECRETS TO GET MORE MOTIVATED SELLERS CONTACTING YOU KATHY KENNEBROOK
Using direct mail campaigns to market to motivated sellers and developing a “cookie cutter” system to accomplish this is one of most affordable, reliable, and effective ways that I know to build your business quickly and have more qualified motivated sellers contacting you than you will be able to handle. For more information on Kathy Kennebrook’s marketing tools to find all the motivated sellers and lenders you need for your real estate investing business go to Kathy’s website at www.marketingmagiclady.com. While you are there be sure and sign up for her monthly newsletter and receive $149.00 of real estate tools absolutely FREE!!
Kathy Kennebrook Kathy holds a degree in accounting and has coauthored the books The Venus Approach to Real Estate Investing, Walking With the Wise Real Estate Investor, and Walking With the Wise Entrepreneur which also includes real estate experts Donald Trump, Suze Orman, Robert Kiyosaki, and Dr. Wayne Dyer. She is the nation’s leading expert at finding highly qualified, motivated sellers, buyers and lenders using many types of direct mail marketing. She is known throughout the United States and Canada as the Marketing Magic Lady. She has put together a simple stepbystep system that anyone can follow to duplicate her success. Kathy has been speaking throughout the country and across Canada for over 14 years and has shared the stage with Ron LeGrand, Donald Trump, Dr. Phil., Dan Kennedy, Mark Victor Hansen, Ted Thomas and Suze Orman to name a few. Dagger LLC
9417925390
P.O. Box 14343
9417956887 (fax)
Bradenton Fl 34280
kpaddler@att.net
UNDERSTANDING THE MIND SET OF THE INVESTOR LEONARD ROSEN
Understanding the Mind set
of the Investor By Leonard Rosen
I
n my 35 years of being involved in the real estate marketplace, I have come to the conclusion that not many promoters of real estate syndication understand the mind set of of the investor.
In order to begin the process of raising capital,
the
promoter
needs
to
understand the risk tolerance and appetite of the investor. Every investor needs to feel comfortable with the asset class, geographical area and dividend yield associated with the investment. Real estate investors have different comfort levels, consequently, the investment must fit into their strategy. Also, investors come in all shapes and sizes, some investors will deploy capital utilizing their self directed IRA, while others deploy capital outside of their retirement accounts.
UNDERSTANDING THE MIND SET OF THE INVESTOR LEONARD ROSEN
Obviously, these are easy questions to be answered with a quick due diligence check list.
I
ask
real
estate
syndicators all the time, what is
your
investors
most
dominate question prior to deploying capital? I receive answers such as dividend yield
is
concern.
the
predominate
After
further
discussion, we realize that the dividend yield is used as an excuse
for
not
feeling
comfortable with the investment proposal.
to begin a dialogue in the purpose of creating a trust factor.
Investors participate in business deals with people that they like and trust. If the trust factor is not
Rule number 2. Exchange contact information and
addressed, the likelihood of an investor participating
reach out to your possible investor by email or phone
in your deal will be low. Addressing the emotional
and thank them for the time they spent with you.
needs of someone who is asked to give you money is a complex issue.
Rule number 3. Schedule a time for coffee to explain in detail your investment strategy to determine if the
I believe you should follow my simple 4 step rule.
investment strategy fits into the investors comfort level. You can speak about risk factors, dividend
Rule number 1. Never ask your investor for capital
yields and security interests.
on a first meeting, simply share some concept and ideas and gauge their interest. This is a time to fact
Rule number 4. Be patient, move the relationship
find and begin your relationship. The ultimate goal is
along at the speed the investors feels comfortable with. This is the time to gauge their interest for their participation. Always remember, Have testimonial letters available, website address and a detailed executive summary of the proposal. Good luck!
UNDERSTANDING THE MIND SET OF THE INVESTOR LEONARD ROSEN
Leonard Rosen CEO, Pitbull Conference “The Most Interesting Man in Hard Money” Leonard Rosen’s career has spanned over 30 years in the financial services market as it relates to real estate. In the 80’s, Mr. Rosen was the nightly news anchor for the Financial News Network. After the network was sold to CNBC, Mr. Rosen hosted the nationally syndicated television program “The Leonard Rosen Show”. Today, Mr. Rosen hosts “Financial News with Leonard Rosen”, which focuses on the real estate markets with an emphasis on the private lending sector. Mr. Rosen’s market commentary has been featured in The Wall Street Journal, Fox News, and MSNBC. As the CEO of Pitbull Conference, he is regarded as “The Most Interesting Man in Hard Money”. Mr. Rosen believes you sell the problem you solve not the product. His visionary approach has earned him praise from the real estate and lending community nationwide. Mr. Rosen provides private consulting to major banks, hedge funds, mortgage companies and private lenders. “Business is based on two essential components, power and leverage. The most common way people give up power is by thinking they don’t have any.”
TIPS FOR SUCCESS MICHAEL POGGI
TIPS FOR SUCCESS By MICHAEL POGGI
T
he Millionaires Real Estate Investment Group is a private investment group made up of 10,000 members and 2500 active investors. The focus of the Millionaires Real Estate Investment group is to invest in several areas of Real Estate and Businesses ranging from purchasing apartment buildings,
building new construction homes, purchasing vacant land in fast growing areas as well as investing in businesses.
TIPS FOR SUCCESS MICHAEL POGGI
I have had decades of experience in Real Estate Investing. Throughout the years, I have had several ups and downs. I will share with you some of the tips that have allowed me to be successful in Real Estate and Businesses. I would like to save you from some of the mistakes that I have made and thus allow you to succeed early on in your career.priorI have had decades of experience in Real Estate Investing. Throughout the years, I have had several ups and downs. I will share with you some of the tips that have allowed me to be successful in Real Estate and Businesses. I would like to save you from some of the mistakes that I have made and thus allow you to succeed early on in your career.
make it all worthwhile. If you never make the attempt, you may never know the depths of despair, but
Take control over your Mind and Your Attitude
neither will you experience the exhilaration of
We all know that there are many things in life that you
success.
cannot control, but you can control your mind and your attitude. External forces have very little to do with
I strive to live my life personally and professionally to
success. Those who program themselves for success
the fullest. I do not allow mistakes or challenges to
find a way to succeed even in the most difficult of
stop progress, when a challenge arises; I determine a
circumstances.
solution and move forward. Do not let challenges stand in the way of your progress in beginning Real
Live life to the Fullest Living life to the fullest is a
Estate or continuing in Real Estate, if you do you will
lot like shooting the rapids in a rubber raft. Once you
be cutting yourself off from the huge success that you
have made the commitment it’s difficult to change
could achieve. Leverage Your Money to Get Deals Done Do not wait until you have all of the money for a deal in order to make that deal happen. There are so many ways to structure a deal. You can partner with someone else that has the money, and you do all of the work, Or you can put in half of the money and the partner puts in half of the money, or you can put down a down payment and let the seller hold the note etc.. Do not let lack of money stop you from getting deals done.
TIPS FOR SUCCESS MICHAEL POGGI
Don’t be Afraid to Change Directions When Necessary It is imperative that we are not afraid to change directions when conditions change. I have been a Real Estate Investor for many years, and have seen the ups and downs of the market. I have always watched the market conditions to determine what strategies make sense. It is not wise to hold on to a strategy when the numbers and the market conditions no longer align. Sometimes it is tempting to jump into a real estate investing strategy that no longer yields great returns due to the market when in reality the time for that strategy has already passed. For example, at the top of the market is not the best time to purchase rental properties. There are strategies that fit every type of market. Our team researches and determines the best strategies to invest in and changes directions when market conditions deem necessary. Grow Your Wealth Tax Free By Investing in Real Estate using a SelfDirected IRA One strategy that has allowed me to gain tremendous wealth has been investing in Real Estate using a Self Directed IRA. An IRA, An Individual Retirement Account is a personal savings plan that allows you to set aside funds for your retirement. Investments made within these plans grow in either a taxdeferred or taxfree environment. A taxdeferred account is one that is funded with pretax dollars which means in most cases that you get a deduction for your contributions. When distributions are taken from the account those funds are taxed. Traditional, SEP, and SIMPLE plans are referred to as taxdeferred accounts. By contrast a taxfree account is one that is funded with after tax dollars, which means that you do not receive a deduction for contributions. When distributions are taken, there are no taxes incurred in a taxfree account. The Roth IRA and the Coverdell Education Plan are referred to as taxfree accounts. The Selfdirected IRA is a wellkept secret. You might not be aware that it is possible to invest in nontraditional investments such as real estate, mortgages, tax liens, mobile homes and other investments in an IRA. A truly selfdirected IRA will enable you to use your investment knowledge and expertise to prepare for your retirement. A selfdirected IRA allows one to make their own investment decisions from a wide range of acceptable investments.
TIPS FOR SUCCESS MICHAEL POGGI
I was able to grow my wealth from $500.00 to $1,200,000 by investing in Real Estate using a SelfDirected IRA. Imagine the difference this strategy will make in your life by allowing you to grow your wealth taxfree. You can learn additional strategies that have allowed me to be a successful Real Estate Investor in my book “Build Wealth Tax Free Profit Formula” that is featured on Amazon. I have taught and mentored thousands of students over the years at my educational seminars and webinars. Please email our office to be added to our database to receive invitations to these events. We often partner on real estate and business projects when the numbers make sense whether it is your project or our projects. Feel free to contact our office for additional information about the Millionaires Real Estate Investment Group. We look forward to getting to know you and finding out more about you and your business and how we can possibly work together moving forward. info@themillionairesgroup.com 9543063586
Michael Poggi Michael Poggi is a nationally recognized public speaker, established author, and professional investor, with nearly two decades of experience. Michael speaks on advanced wealth strategies and how to invest in Real Estate and Businesses the right way .He presents topics such as: house flipping, purchasing apartment buildings, and building new construction homes, development projects, purchasing vacant lots in fast growing areas and buying businesses in your IRA or your old 401K plan. He teaches people how to make their IRA selfdirected in the true sense, so you can use it for real estate. He also teaches people and mentors students on how to make their IRA cash flow monthly taxfree as well as how to invest properly. In addition, Michael is the president and founder of The Millionaires Investment Group, based in Ft. Lauderdale, Florida. There are 10,000 members of the Millionaires Investment Group and 2500 Active Investors. The Millionaires Investment Group holds a meeting on a monthly basis to network and partner on real estate ventures, and businesses. Michael’s company specializes in many aspects of commercial real estate, vacant land, development projects, new construction home projects and businesses. The group attracts top notch speakers from all around the country, who are featured monthly to provide additional education. Michael is often a featured guest on the Money Talk radio show. His company, Build Wealth with Land, LLC, is one of the largest land providers in the U.S., providing hundreds of vacant lots to investors and builders yearly. Michael has bought and sold over 1000 vacant lots and houses in the last 10 years, tax free.
MAKING THE DECISION TO CONTROL YOUR MONEY (PART 2) REBECCA RICE
Making the Decision to Control Your Money excerpt from the book multiply your wealth Chapter 1. Why Have You Missed This Secret? (Part 2) By Rebecca Rice
I
nterest: Are you paying it or are you earning it?
Secret #1: Uninterrupted Compounding Interest paid to YOU.
Many of us have been on the paying side of interest. When we borrow money for a house, car, or credit card debt, the interest is relentless. It doesn’t sleep. It doesn’t rest. It never takes a day off. It continues to add up.
MAKING THE DECISION TO CONTROL YOUR MONEY (PART 2) REBECCA RICE
Albert Einstein is thought to have said, “Compound interest is the eighth wonder of the world. He who understands it, earns it…he who doesn’t…pays it.”
Your path to financial security has a Figure 1.1 direct relationship to compounding interest. Compounding means that the interest you earn also earns interest. If you have $10,000 and it earns 5% interest in a year, you have $10,500 at the end of the year. If that interest is paid monthly, it looks like this: (see figure 1.1) Figure 1.2
You may look at this chart and think, “No big deal, that’s only and What if you put in an additional $500 a month to your original $10,000? extra $14.72.” But look what In 60 years you’d have accumulated $2,356,483.65 when happens when you allow that compounded annually. Your cash investment would have totaled compounding interest to grow for $370,000 of that amount. The rest—nearly $2 million—came from 10, 20, or even 60 years.
compounded interest alone.
Your one time deposit of $10,000 Look at what happens when you start with a smaller amount and allow grew to $199,607.39 without you it to compound for a longer time. In the following chart, you started with adding one more cent! That’s the only $1,000. Even though it’s 1/10th the amount of the illustration gift of time and compounding above, with 8% compounding and 40 more years, it’s also grown to interest. (see figure 1.2)
over $2 million.
MAKING THE DECISION TO CONTROL YOUR MONEY (PART 2) REBECCA RICE
The profitability of compounding interest works regardless of interest rate. The higher the interest paid, the faster the growth. The more frequently interest is compounded, the faster
it
grows.
Interest
compounded daily grows faster than
interest
compounded
monthly, quarterly, or annually. Banks, for example, will charge you interest on your loans compounded daily (more money for them). And they will pay you interest on your savings quarterly (less money for you). You can go to http://investor.gov/tools/calculators/compoundinterestcalculator and check out different results. Plug in your current principal and optimal monthly additions. See how much your money will grow over time. Yes, compounding interest is profitable. But how can you get it? You know banks are paying nearly zero interest on accounts. Bonds and stocks have higher interest or dividends, but the underlying asset is subject to risk and market swings. What good is earning 8% on $10,000 in stocks and bonds, when the underlying $10,000 might drop to $6,000? When you add market fluctuations into your compounding interest growth, you end up with remarkably less money. Figure 1.4 shows compounding when you include stock market losses that reduce your capital. Uninterrupted, this same 8% yield would give you over $9 million! (See Figure 6.2 in Chapter 6 of the book)
Where Can I Find a Secure Place to Earn Uninterrupted Compounding Interest? What investment or savings institution is free from market fluctuations?
MAKING THE DECISION TO CONTROL YOUR MONEY (PART 2) REBECCA RICE
One of the best kept secrets in the entire
In their 200 year history, no policy owner has ever
financial services industry are the “Living
failed to receive his or her life insurance payment. You
Benefits” found within certain kinds of life
will get your death benefit from mutual life insurance
insurance. It is a completely safe place to
companies.
compound your money. When you purchase whole life insurance from a Mutual Life Insurance
Unlike banks that can loan out 90 times more than
Company, you actually own part of the company.
savers have deposited, insurance companies are required by law and by contract to keep 100% of their
While you may have heard bad things about whole
assets secure. That means your money is safe,
life insurance, I encourage you to withhold
secure, and growing.
judgment. Read the truths in Chapter 4 and decide When you own a dividendpaying whole life insurance
for yourself.
policy you gain access to compounding interest that The profits of a mutual life insurance company are
increases your wealth day after day and year after
returned to you, the owner, through dividends.
year. Each year it’s worth more than the year before. It
Over the years as inflation has increased or
is also:
decreased, the dividends paid have ranged from 3% to 12%. At times, mutual insurance companies
•
Safe
have announced added dividends. Your money
•
Private—it’s not reported to the IRS
keeps pace or stays ahead of inflation.
•
Not subject to market swings
•
Keeps up with inflation.
Mutual life insurance company failure is extremely low, much lower than banks or other stock companies. Even in the few cases
of
failing
insurance companies, other companies step in and make sure policy owner’s money is safe and insurance policies are fully paid.
MAKING THE DECISION TO CONTROL YOUR MONEY (PART 2) REBECCA RICE
Additionally, money in a dividendpaying whole life insurance policy gives you “living benefits.” You gain use of your money for many things while you are alive. You can: 1.
Gain safety, control, freedom, and privacy
2.
Borrow money low cost or netzero cost
3.
Avoid credit checks or bank approval
4.
Gain taxfree retirement income – yes! Taxfree
5.
Loan your business money and save taxes
6.
Recapture lost opportunity costs
7.
Keep your money safe from bankruptcy and lawsuits depending on individual state laws
8.
Pay of debt faster
9.
Create an emergency fund
“Search for Multiply Your Wealth on Amazon.” The price is $14.99.
How have the rich used this strategy to multiply their wealth, keep their money safe, and achieve financial freedom?
Rebecca Rice Rebecca Rice has been a financial planner for 25 years; her breadth of experience helps her clients navigate all aspects of gaining financial freedom and wealth management. She is Managing Partner and Founder of her firm, RebeccaRice and Associates, which was established in 2001. Rebecca is considered a master of the Living Benefits of Whole Life insurance among her peers. She can show you how to use Living Benefits to invest in real estate as well as build a business, pay off debt, build financial freedom, gain retirement income, and produce generational wealth—because she’s done it all. Rebecca holds two degrees from the University of Arkansas—a BSBA in Marketing and a BA in Management. Rebecca’s peopleoriented, friendly personality and faith based heart help her relate to her clients on a personal level, allowing her to build the best financial strategy possible. Her goal is to educate her clients on bettering their financial situations and offer them strategies that best fit their needs. A current member of the National AALU and Life Insurance Product Committee for Mass Mutual, Rebecca has also served as past President of the GAMA Association through her relationship with a wellknown life insurance company. She has written a book, entitled Multiply Your Wealth: Essential Secrets for Financial Freedom, published in 2014. In her personal life, she is a Patron and Auxiliary member for Arkansas Children’s Hospital as well as supporting and working with many other nonprofit organizations. Rebecca is happily married, has 3 children, 2 grandchildren, and 2 beloved dogs, all of whom who live in Arkansas, close to her.
7 PERSONAL FINANCE QUESTIONS TO ASK YOURSELF BEFORE GETTING A MORTGAGE DR. TERESA R. MARTIN
7 Personal Finance Questions to Ask Yourself Before Getting a Mortgage By Dr. Teresa R. Martin
A
re you ready for a mortgage? It’s a big step that requires careful planning. A mortgage will affect your financial future for years to come.
7 PERSONAL FINANCE QUESTIONS TO ASK YOURSELF BEFORE GETTING A MORTGAGE DR. TERESA R. MARTIN
Before you sign that mortgage, consider these finance questions: 1. What is your credit score? Credit scores affect mortgage rates. • Before buying a house, check your credit score. Should you raise your score to get a better interest rate? In general, high scores with no late payments during the last three years are enough to get good rates. 2. Are you capable of handling maintenance costs? It’s important to consider the cost of maintenance before buying a house. • The mortgage is only one part of the total cost of owning a house. Maintenance is another
important piece. Will you be able to pay for a new roof or air conditioning system when the current ones wear out? • Does your monthly budget include enough savings for maintenance? • It’s also important to consider DIY projects and hiring others to complete tasks. House
maintenance can involve expensive and ongoing projects. Are you ready to pay for these costs?
3. How secure is your job? Before signing a loan, evaluate your job security. Will the work last? How will you handle changes? • Evaluating your job future is part of planning for a home purchase. • Consider emergency funds and savings in your plan. If your job situation changes, will you be able to continue making monthly mortgage payments?
7 PERSONAL FINANCE QUESTIONS TO ASK YOURSELF BEFORE GETTING A MORTGAGE DR. TERESA R. MARTIN
4. Do you have the necessary financial paperwork? Mortgage applications require a great amount of paperwork. Lenders can ask for old tax statements, check stubs, savings account statements, and other information. • If you have a high credit score, you may get a no documentation loan. • It’s rare to get a no documentation loan, so it’s better to be prepared by checking your files and collecting the financial papers you may need. 5. Did you calculate the hidden expenses of owning a home? Home ownership comes with multiple expenses that go beyond appraisal fees, property taxes, mortgage closing costs, and insurance. • One of the hidden expenses of moving to a home is more bills. If you’re used to renting, then home ownership can change your monthly bills by adding new ones. You’ll add trash collection, water, recycling and sewage in most locations to the expense list. • Home insurance is higher than renter’s insurance. In addition, older homes cost more. • Homeowners' association fees are becoming more common in neighborhoods. You may be aware of condominium association fees, but are you ready to pay homeowners’ fees? 6. Do you have an emergency fund? Emergencies can vary from broken dryers to flooded patios, so you need to be ready for anything. Is your emergency fund big enough to handle common, unplanned expenses? • Emergency funds are a better option than credit cards or loans. Putting enough money aside can help you avoid new debt.
7 PERSONAL FINANCE QUESTIONS TO ASK YOURSELF BEFORE GETTING A MORTGAGE DR. TERESA R. MARTIN
7. Are you applying for other credit? Mortgage lenders can see applications for other types of loans on your credit report. • Applying for other types of credit while trying to get a mortgage can hurt your loan.
Mortgage companies view these applications as risks, so it’s better to wait before trying to get another credit card. • Applications for new credit lower your credit score and affect interest rates.
A mortgage is a responsibility that affects multiple areas of your financial life. Before you buy a house, consider how your current financial situation will be affected and plan for emergencies.
Dr. Teresa R. Martin Dr. Teresa R. Martin, Esq. is the founder of Real Estate Investors Association of NYC (REIA NYC). REIA NYC (www.reianyc.org) is a premier real estate investment association serving the New York City marketplace. Its primary focus and mission is “helping our members build, preserve, and harvest multigenerational wealth” in the areas of real estate investments, business ownership and personal development.
THE FLIP SIDE OF PRIVATE LENDING SENSEI GILLILAND
The Flip Side Of Private Lending This is the Third Fastest & Easiest Way to Profit from Real Estate; is it for You?
By Sensei Gilliland Founder of Black Belt Investors
s
hould you be a private lender? As you know I have been one of the most visible and vocal advocates of wholesaling houses and remote rehabs. However, I have to admit that being a private money lender is becoming increasingly attractive. I’d now rank it in the top three smartest ways to generate returns in
real estate. So who should consider this investment strategy? Why is this the best moment for this type of investment? Who on earth should you consider lending to?
THE FLIP SIDE OF PRIVATE LENDING SENSEI GILLILAND
Lending Versus Borrowing
You might consider becoming a private lender if: a. You have $10,000 or more free to invest
I’ve been investing in real estate and training
b. You are too busy to rehab homes on the
investors from coast to coast for over 20 years. I’ve
weekends
connected with thousands of students and seasoned
c. Wholesaling houses just doesn’t appeal to you
investors can helped them get started and scale
d. You are extremely busy, and love your current
wholesaling
career
businesses
and
rental
property
portfolios. I still love these two strategies, and I
e. You need more from your retirement savings
wouldn’t ever give them up either personally or as a
f. Your portfolio needs diversification or
recommendation for those looking to increase their
restructuring
cash, wealth, and time freedom. Still, being a private lender is getting more attractive.
The Advantages of Private Lending for 2016 & Beyond
For some this role may be the most attractive move. For others is at least a core part of their total
The main draws to private lending are:
financial plan. •
Truly passive income
•
Above average returns
•
Security of investing in real estate
The Wall Street Journal, Forbes, and the JOBS Act have helped to raise awareness of the benefits of private lending, and have no doubt aided this type of investment becoming more mainstream. But who is it really right for?
THE FLIP SIDE OF PRIVATE LENDING SENSEI GILLILAND
Who Do You Loan To? The mechanics of making loans or partnering up is relatively simple. The real minefield is lending on the right properties, and to the right investors. Those individuals that have been investing in stocks
There is no shortage of buyers and real estate
and bonds and gold may find there is no better time
investors, or other lenders who will be eager to borrow
to adjust their portfolios to include private real estate
your capital. Walk down the street with an “I sell
loans. Gold prices are up there. Fund giant Bill
money badge,” and you should find plenty of takers.
Gross has warned that we are in for negative rates
Of course few might deserve it, or will be able to
for quite a while. That means bonds and savings
handle it. They may have great marketing and
accounts costing money, rather than protecting it.
presentation materials, and the best intentions in the
Even the former CEO of Wells Fargo recently came
world. But if they don’t have what it takes to deliver
out and suggested we don’t put new money into the
then it’s highly risky.
stock market. That’s big. Real estate is about all that’s left.
So what should you be looking for in someone to lend your capital to?
It doesn’t get much simpler than loaning your money to someone else; letting them do all the hard work.
• Experience
Then enjoying a share of the profits. That is if you
• Long term, big picture thinking
make good loans.
• A proven system • A sustainable business model • Have a strong advisory team Of course the best borrowers or investment teams are going to be equally selective about who they accept capital from. I know I am. In most cases, when a bank or credit card money sends me an offer I know it’s probably a bad deal. I don’t need the money, and it is normally on terms which are in their favor, and borrowing is doing them a favor. I don’t know about you, but I don’t feel that sympathetic with most high street banks. At least not to the point where I feel I have to make them a profit. But I do like helping ethical individuals, couples, and families find a way to get ahead.
THE FLIP SIDE OF PRIVATE LENDING SENSEI GILLILAND
When I’ve entertained putting capital into my deals for others in the past, or making introductions between my strongest investor students and private lenders I am looking at what extra value that lender brings to the table, and what extra value they’ll receive in return. A good private lender is one who accepts fair terms for making a good investment, with a great business or investor. They have good character (you don’t want to be caught up in money laundering or fraud). They can work as fast as you do, are flexible, and understand the roles both the frontline investor plays, and are excited about just collecting reliable, above average returns, while they go about being busy with the other things they really care about. Could private mortgage lending be for you? With lower barriers to entry today, and us being busier than ever, it could certainly be a good entry point into real estate for many, or an attractive option to add to the mix in a wellrounded portfolio. Thinking about private lending? Get a free strategy session with Sensei by calling now 951.280.1900.
Sensei Gilliland Founder of Black Belt Investors; Sensei Gilliland has been featured on the cover of Real Estate Wealth Magazine, hosts ‘The West’s Top Ranked Real Estate Investors’ Club’ – 12 ROUNDS, and has engineered several highly popular trademarked real estate investment systems. Sensei is the goto source for serious investors and entrepreneurs seeking extremely effective, no holds barred training, investment properties and funding. Claim your copy of his powerful Cash and Wealth Report here.
MORTGAGE FREE REAL ESTATE MATTHEW PILLMORE
Mortgage Free Real Estate Disclaimer: I am not a lawyer or an accountant. Nothing here should be construed as professional advice. I suggest that you always retain the services of a competent professional to provide advice on your transactions.
By Matthew Pillmore
I
f you have a loan on your primary residence and/or rentals, you may have considered whether it would be worthwhile to pay it off ahead of schedule. And if so, you’re not alone. The debate over whether to prepay your mortgage is perpetual in the personal finance world.
MORTGAGE FREE REAL ESTATE MATTHEW PILLMORE
of taking the standard 30 years to pay off their mortgage, they paid it off in well under 10 years. Ask him if he cares about the tax deduction they missed out on, and he’ll probably look at you like a crazy person. Why? Because the decision to prepay was never JUST about the math to them; it was about their financial freedom. And math aside, they have never regretted their decision to pay off their
Pay Off Your Mortgage or Invest? The Math Says… On one side, some experts argue you should NOT prepay your mortgage if you are locked in at a low interest rate. Their reasoning: You would be better off INVESTING your money where a reasonably diversified stock portfolio can expect to earn at a higher rate of return on average over the long run. Add in the home mortgage interest deduction you can take on your federal taxes and, they say, you would be silly to prepay your mortgage and miss out on those perks. To this group, the question is just about math. After all, why would you prepay a loan at 3% or 4% and lose out on part of a valuable tax deduction when you could invest that money instead and earn considerably more?
But There’s a VERY Important Side to Prepaying Your Mortgage, Too Still, there are plenty of experts who forge ahead with their mortgage prepayment plans. My parents (including a CPA father) fell squarely in that category.
home and become entirely debtfree. Most people agree with that sentiment, eventually. Most, just don’t like debt. It’s as simple as that. But others prefer a deeper analysis.
Analyzing the Pros and Cons For starters, let’s take a look at what the home mortgage interest deduction really means. The easiest way to figure out your home mortgage interest deduction is to look at your effective tax rate. Say your overall tax rate is 22%, for example. On average, the home mortgage interest deduction reduces your taxes by $22 for every $100 you pay in mortgage interest.
MORTGAGE FREE REAL ESTATE MATTHEW PILLMORE
The interest you save by prepaying your mortgage is a “sure thing.” Many people are happy prepaying and banking the extra money they save on interest, even if it’s less than they may have earned by investing their extra dollars instead.
A Balanced Approach As someone who loves leverage but despises (ALL) debt, I see both sides of the issue. And that’s why I personally take (and teach) others to consider a balanced approach. My only debt includes what is used to advance the That’s a nice perk, but there’s a caveat. Your home
assets and income growth of my plan, but is paid
mortgage interest deduction is only valid for the
back strategically to $0 as quickly and safely as
amount you deduct over and above the standard
possible. I don’t see the reason to choose between
deduction, which is available to taxpayers who don’t
investing extra money OR prepaying my mortgages,
itemize their returns. The standard deduction for
so I rely on Debt Weapons™ to do both faster.
married spouses filing jointly was $12,400 in 2014.
What About Debt Weapons™?? So what does that mean? Simply put, if you don’t itemize your taxes, your home mortgage interest
Debt Weapons™ are tools that allow any consumer
deduction is worth nothing. And even if you do, it’s
to achieve 1 or more of 7 highly financially beneficial
only worth what it helps you save over the standard
purposes.
deduction that anyone can take. In many cases, this drastically reduces the value of the home mortgage
1) Maximize Cash Flow
interest deduction to the point where it’s barely worth
2) Compress Amortization Schedules
considering.
3) Replace Inadequate Bank Accounts 4) Invest More Quickly & Safely
But what about those lost investing returns? When
5) Minimize Total Interest Costs
you ask people whether or not they prepay their
6) Enhance & Protect FICO® Credit Scores
mortgage and why, you’ll find plenty of skeptics who
7) Quickly Increase Financial Safety and Emergency
balk at the idea of carrying longterm debt in favor of
Reserves
investing their extra dollars in the stock market. And when it comes to who is “wrong” or “right,” there are
To be clear, VIP Financial Education does not
several ways to look at it.
provide or offer Debt Weapons™.
MORTGAGE FREE REAL ESTATE MATTHEW PILLMORE
We do the research for our Coaching Members in order to help them decide where to go to get the right Debt Weapons™, at the right time, to accelerate their unique goals. Just like exercise equipment can injure you when used incorrectly, Debt Weapons™ can also be quite harmful if you access the wrong one or use the right one the wrong way. Applying for any Debt Weapon™ without knowing the proper questions to ask, can lead to several negative consequences. For example, credit scores can rapidly decline, you could access the wrong Debt Weapon™ for your intended purpose leading to unforeseeable costs and terms, possibly delaying your goals even further. That seems like a good compromise to me. Still, there is nothing wrong with taking sides on this issue. When you hate debt, you want to put it behind you once and for all, and that’s understandable. But it’s also understandable for someone to make their decision based solely on the numbers. After all, it’s hard to argue with math. At the end of the day, we all have to do what is best for our families – and what helps us sleep best at night. So, should you pay off your mortgage quickly? It is, and always has been, up to you, yet by joining us at the upcoming event with Realty 411 you will learn how YOU too can rely on Debt Weapons™ to take a more advanced approach and achieve BOTH simultaneously, far more quickly. Matthew Pillmore President VIP Financial Education
BECOMING YOUR OWN BANKER WITH THE INFINITE BANKING CONCEPT JAMES NEATHERY
Becoming Your Own Banker with The Infinite Banking Concept™ By James Neathery
T
he Infinite Banking Concept is a method which allows any individual or business owner to Become Their Own Banker using a financial tool that has been around for over 200 years.
People can use this strategy to create their own private economic system allowing them to control the banking
function in their lives.
This allows the practioner of IBC to capture the equivalent of the interest they pay to 3rd party lenders over their lifetime, which is significant. They also earn the equivalent of dividends typically earned by the banks when using bank financing.
BECOMING YOUR OWN BANKER WITH THE INFINITE BANKING CONCEPT JAMES NEATHERY
IBC equates to building cash in a preengineered tax free trust then using that cash to finance everything you were going to finance anyway i.e., autos, real estate, retirement accounts, vacations, education etc. The fact is we finance everything we purchase. We either pay cash and lose interest we could have earned or we formally finance and pay someone else interest; there are no exceptions to this fact whether the reader recognizes this or not.
We have thousands of clients using this method to build and maintain control of their wealth generationally. One of my favorite examples is of a client in the construction business. He uses IBC to purchase loads of rebar, a commodity that fluctuates
The Infinite Banking Concept, Becoming Your Own Banker is an education in banking, finance and properly structured dividend paying whole life insurance issued by a mutual company. It takes some unlearning as well as learning to grasp this
in price. He buys at a volume discount allowing him to outbid his competition when bidding construction jobs. Business owners often use this method instead of lines of credit (which the bank controls); real estate investors can use this instead of hard money.
simple concept. The Infinite Banking Concept is very simple but seems difficult partly due to the financial noise that permeates our lives today.
I am a student of my profession. While attending a two day seminar in 2004 I purchased the book Becoming Your Own Banker with several other books
If you would like to learn more, go to: bankingwithlife.com and purchase the original text Becoming Your Own Banker, Banking With Life DVD and How Privatized Banking Really Works.
the speakers referenced. After reading BYOB I restructured my life insurance and investments and have been using this method personally and teaching my clients how to implement this concept into their lives. The Infinite Banking Concept has changed my life, my practice and the lives of 1000’s of clients. If you give this concept a thorough investigation, without prior contempt, it will change the way you look at money. Order the book Becoming Your Own Banker and the Banking With Life DVD today and I will send you the book How Privatized Banking Really Works!
BECOMING YOUR OWN BANKER WITH THE INFINITE BANKING CONCEPT JAMES NEATHERY
James Neathery CEO, James C. Neathery and Associates James Neathery specializes in providing strategic financial advice based on decades of research and experience in the fields of finance and economics. James is a disciple and student of R. Nelson Nash, the creator of the Infinite Banking Concept™. He is also a student of the Austrian school of economics. James holds several designations, maintains multiple affiliations and is active in the financial services industry. He has been in the life insurance industry for more than 24 years, has been educating clients and personally practicing the Infinite Banking Concept™ for nearly a decade. James C. Neathery & Associates, Inc. has provided sound, successful advice to thousands of clients. Over the years he has helped them protect millions of dollars in wealth and assets through several boom and bust cycles in the U.S. economy. James is the Executive Producer of the bestselling documentary on the Infinite Banking Concept, Banking With Life. The powerful information in this film is being used by financial professionals across the country to educate their clients on how to take control of their money by solving the banking equation in their lives.here.
About Infinite Banking James Neathery Our Team Nelson Nash
MANY U.S. COMMUNITIES SEEING REAL ESTATE INVENTORY AND LEAD SHORTAGE LEON MCKENZIE
Many U.S. Communities Seeing Real Estate Inventory and Lead Shortage By Leon McKenzie, Managing Partner, US Probate Leads
A
s a professional real estate investor, keeping a pulse on the changes in the market can be the difference between having a profitable year and seeing losses in your business. Seeing these trends and knowing how to react to them can be one of the most critical skills for any individual working in the property business.
MANY U.S. COMMUNITIES SEEING REAL ESTATE INVENTORY AND LEAD SHORTAGE LEON MCKENZIE
One of the most pronounced trends in the market
Decreased
construction
means
that
more
recently has been the tightening of real estate inventory
homeowners and business owners are staying
and, consequently, a shortage of leads. This trend has
where they are in terms of their location.
paralyzed many real estate professionals and prevented
Homeowners and business owners who would like to
them from finding and making the deals that will take
relocate to a new home or office space simply don’t
their business to the next level. The contributing factors
have any options from which to choose. This means
to this problem come from many areas. Knowing a bit
that people are more likely to pursue the option of
about the factors that are causing the issue will help you
remodeling or adding on space rather than going out
to navigate the current changes in the market.
into the real estate market and looking for a new residential or commercial property.
Contributing Factors to Real Estate Shortage Heavens said that it can be challenging to try to There are a myriad of factors that may be affecting your
predict how much space will be needed in any given
real estate business and your ability to find good
year, “Predicting how much housing is needed
properties – both on the residential and the commercial
involves a complex calculus that weighs hard
side – that will lead to profits and excellent options for
statistics (newhome starts, sales of previously
your portfolio. Alan Heavens of the Philadelphia Inquirer
owned homes) against a certain amount of
reported, “Research from the National Association of
demographic tealeaf reading (householdformation
Realtors shows the U.S. needs to build 1.3 million to 1.7
forecasts). Thus, there isn't complete consensus on
million housing units annually to keep pace with yearly
what will be enough. ‘At current levels of housing
household formations averaging 1 million to 1.4 million,
construction and demand, the nation has just about
in addition to replacing the 300,000 obsolete dwellings
two years' worth of excess vacant homes for sale
that are razed each year. Statistics released two weeks
and rent,’ said Moody's Economy.com chief
ago by Freddie Mac, however, show that only 910,000
economist Mark Zandi.”2 Without additional
units were started in 2008 and 550,000 in 2009.
construction, many homeowners and those looking
Projected starts for 2010 are better, but just 700,000
for commercial space may find themselves
units.”1
frustrated.
MANY U.S. COMMUNITIES SEEING REAL ESTATE INVENTORY AND LEAD SHORTAGE LEON MCKENZIE
Here are just a few statistics that support the issues with the current real estate market according to Heavens: • “At the current sales pace nationwide, the supply of previously owned houses would take 7.8 months to exhaust, not including the vast "shadow market" (houses whose owners are waiting to sell until real estate recovers) and "distressed properties" (foreclosures and bank repossessions). • The inventory of unsold new houses is at 9.1 months of supply, and the volume for sale is flat at 234,000 homes — a 30year low. • At the end of the fourth quarter, 24 percent of all U.S. homes with a mortgage were worth less than the loan balance. The housing vacancy rate in the fourth quarter was 2.7 percent. • The U.S. homeownership rate is 67.2 percent, down from its peak of 69.2 percent in fourth quarter 2004 and decimated by record foreclosures.”3
Booming Populations Contribute to Shortage in Some Areas With the population in the United States continuing to shift to areas with temperate weather, positive economic conditions and those that don’t have issues with fresh water supplies, some areas are seeing a boom in population that no level of construction can meet. Connor Hyde writes, “The Sugar Land and Missouri City area experienced a record number of home sales in 2014. However, population growth in the area paired with various construction woes has led to a low home inventory, causing a rise in home prices and a dip in sales since January. Since 2012 Sugar Land and Missouri City real estate agents have classified the area’s housing market as a seller’s market due to the decreasing inventory of available homes and climbing home costs. As a result, many of Fort Bend County’s masterplanned communities are struggling to keep up with the demand brought on by the influx in population in the region.” 4 In fact, these changes to the market have driven up the prices of the homes that are currently on the market. Hyde quoted a local real estate agent, Shad Bogany, who has seen these changes first hand, “‘We have more customers than we have houses to sell, and we are getting multiple offers on houses,’ said Shad Bogany, a real estate agent with Better Homes and Gardens Real Estate in Sugar Land and Missouri City. ‘We do not have a lot of houses to sell, [and] we have the builders, who have been the biggest pushers of home sales in Fort Bend [County], behind in construction.’”5
MANY U.S. COMMUNITIES SEEING REAL ESTATE INVENTORY AND LEAD SHORTAGE LEON MCKENZIE
Issues with construction in population booming areas
may end up staying in their current home to avoid the
face a twopronged challenge – not enough qualified
problem.
workers for residential projects and not enough funding. Hyde writes, “Home developers and cities
Changes in Season Effect Inventory
are competing with projects in the Greater Houston area, such as the construction of the new Exxon
Another contributing factor to the shortage in real estate
Mobil campus in Spring and the continued
inventory is the upcoming change in season. While spring
construction of the Grand Parkway. These major
markets generally show expansion as more and more
projects have contributed to the lag in home
property owners put their homes on the market, the
construction as there are fewer skilled laborers
opposite it true during the fall and winter months,
available. ‘That is exactly why we cannot keep up
especially in the cold weather climates. Said Lawrence
with building homes fast enough,’ Reichert said.
Yun, “As winter approaches, inventory will slide further.
‘There are just not enough workers out there to build
Few homes are newly listed after Thanksgiving.
homes [and] builders struggle on a daily basis to find
Historically, inventory tends to be 15 percent lower in
workers.’” 6
winter than summer. Last year’s seasonal decline was even more dramatic, at 25 percent. We hope we won’t see
While all of the construction that is being completed
an inventory decline of that magnitude this winter. Home
in booming areas may seem like a good thing, there
values rising much faster than income growth will markedly
are also ancillary issues. Hyde writes, “The shortage
cut into housing affordability.”8
in laborers and influx of construction projects has also led to an increase in the price of construction
The contraction in the market will pull many properties off
materials, which has directly caused housing prices
of the market with buyers still looking to purchase homes.
to increase, Reichert said. Since 2011 material costs
Being able to find a property during any time of the year is
have increased by 11.7 percent and are expected to
becoming a significant challenge for buyers who want to
climb through June 2016, according to the national
have several homes they can investigate.
construction
management
company
Construction Company’s price index.”7 Not only are homeowners faced with fewer properties to choose from and fewer new construction
projects,
but
the
new
construction they do find may cost the average homeowner more money than they can afford to spend. With rising construction material costs, the associated increase in new construction prices may prove to be too much for homeowners. These homeowners
Turner
MANY U.S. COMMUNITIES SEEING REAL ESTATE INVENTORY AND LEAD SHORTAGE LEON MCKENZIE
Alternative Leads are the Solution Is there a way to solve the lack of leads currently occurring in the real estate market? There is. For real estate investors who want to continue to profit no matter the market, looking to alternative leads is the best strategy. These leads – found in the probate, divorce and bankruptcy industries – are the best way for investors to find homes and commercial properties despite the shortage in the United States. Probate leads are plentiful. With experts estimating that more than 30,000 probates are filed each month throughout the United States, each and every county has new options of homes, personal property, vacation homes and commercial real estate that are for sale. Executors, responsible for the sale of property held by someone who has passed, are under an obligation from their local court jurisdiction to sell the property in order to close the probate. What does this mean for you as an investor? For real estate investors, probate
properties
offer
discounted
some of the most desirable areas of the region that you work in. Executors are generally eager to look at all offers for property as they need to sell the property in order to pay medical bills, taxes, legal fees and funeral expenses for their loved one.
prices,
sometimes up to 30% to 50% off of current market
prices, on homes and other property located in
Divorce and bankruptcy leads are also another way to find great deals on property. Usually governed by the local court system, these leads can also provide excellent options for discounted prices. With divorce and probate leads it is critical to have your attorney review all of your documentation especially during your first experience working in this market. The language used in the sales documents can be different that is used in traditional offers due to legal requirements. Ask your legal counsel to ensure that there are ways for you to exit divorce deals if the parties do not cooperate. As an investor it is not wise to have your deal stalled due to marital discord.
MANY U.S. COMMUNITIES SEEING REAL ESTATE INVENTORY AND LEAD SHORTAGE LEON MCKENZIE
Accessing Alternative Types of Leads The best way to access these alternative types of leads is to use a lead service that can help you to locate the most current and viable option for your business. U.S. Probate Leads, the industry leader in lead coordination, offers probate, divorce and bankruptcy leads in every county in the United States. Our qualified, trained professionals visit courthouses to collect the most uptodate information on what types of property is available through the probate. Using an expert service will help you to save time on trips to the courthouse and give you more time to visit properties and make contact with Executors. We offer a full range of services, including webinars, seminars, books, communication software and even individualized mentoring. Call us today or visit us at www.usprobateleads.com for more information.
Sources: 1 http://www.matrixrealestate.com/aboutmatrix/marketnews/slowingconstructioncouldleadhousingshortageexpertssay 2 http://www.matrixrealestate.com/aboutmatrix/marketnews/slowingconstructioncouldleadhousingshortageexpertssay 3 http://www.matrixrealestate.com/aboutmatrix/marketnews/slowingconstructioncouldleadhousingshortageexpertssay 4 http://communityimpact.com/2015/05/06/lowinventorieslaborshortagescontributetorisinghomeprices/ 5 http://communityimpact.com/2015/05/06/lowinventorieslaborshortagescontributetorisinghomeprices/ 6 http://communityimpact.com/2015/05/06/lowinventorieslaborshortagescontributetorisinghomeprices/ 7 http://communityimpact.com/2015/05/06/lowinventorieslaborshortagescontributetorisinghomeprices/ 8 http://realtormag.realtor.org/newsandcommentary/economy/article/2012/11/seedshousingshortage
SOLO 401K: A TAX SAVING STRATEGY FOR REAL ESTATE INVESTORS DMITRIY FOMICHENKO
Solo 401k: A Tax Saving Strategy for Real Estate Investors By Dmitriy Fomichenko
I
f you’re a taxpaying citizen, this quote is likely to make perfect sense to you. Nobody loves taxes, at least at a deep intrinsic level, irrespective of it being a responsibility we must share. According to a report published on the Motley Fool, a finance website, out of the gross tax collections worth $2.86 trillion in
2013, individuals paid $1.54 trillion or 54% of them, with an average individual tax bill of $8,548.
SOLO 401K: A TAX SAVING STRATEGY FOR REAL ESTATE INVESTORS DMITRIY FOMICHENKO
However, the average individual tax bill doesn’t project a clear picture of average tax rates. For an instance, the average person earning between $125,195 and $175,817 was taxed at 21%. If you made $150,000 during the given financial year, you would’ve paid $31,500 in taxes. That’s nearly four times of the average individual tax bill in 2013. If you’re a fairly successful real estate investor, saving on taxes could be a potential challenge for you, and you might have been spending a lot of time figuring out effective tax strategies.
SelfDirected Solo 401 K Plan: 3 Tax Saving Strategies For Realtors At Sense Financial, a major part of our clientele
involves
real
estate
professionals, seeking effective methods to cut their taxable income. As a self directed Solo 401k plan provider, we help our clients cut their taxable income by a huge margin; precisely up to $59,000 in 2016.
A Brief Insight into SelfDirected Solo 401 k Plan Solo 401 k plan is a qualified retirement plan from the IRS,targeting owneronly businesses and selfemployed individuals. As a part of the annual contribution limits, you can contribute up to $53,000 in 2016 along with a catchup contribution of $6,000 for professionals above the age of 50 years. The primary attraction of this plan is its ability to invest in a plethora of investment options, including real estate, tax liens, tax deeds, mortgage notes, private lending, and private businesses along with the traditional investment options.
Contribute up to $59,000 of Your Real Estate Income in 2016 If you are a realtor with no fulltime employees, you can contribute up to $59,000 in 2016. The contribution includes a salary deferral contribution along with a profitsharing contribution.
SOLO 401K: A TAX SAVING STRATEGY FOR REAL ESTATE INVESTORS DMITRIY FOMICHENKO
from his real estate business in 2015. Bob contributes $6,500 in
his
companysponsored
retirement plan, which cuts his salary deferral contribution in the Solo 401k plan to $17,500 in 2015, making net salary deferral
contributions
of
$24,000. As a single member LLC, Bob can further contribute up to 20% of his business income or $12,000 in 2015, allowing him to cut his taxable Salary deferral contribution: Under the salary
income by $36,000.
deferral contribution, you can put up to $18,000 in
2016along with a catchup contribution of $6,000 for
Find out your annual contributions with our
professionals above the age of 50.
contribution calculator.
Profitsharing contribution: The profit sharing
Purchase Rental Property with Solo 401 k plan & Defer Taxes on Rental Income
contribution allows you to contribute 20to 25% of your business income, with maximum cumulative contributions
of
$53,000
or
$59,000,
for
professionals above 50 years, in 2016.
If you already have a selfdirected Solo 401 k plan, start purchasing rental property within your retirement account. The IRS allows investing in real
Case I: Melinda,41 years old and a real estate
estate through a Solo 401 k retirement plan, which
investor operating as a corporation, had a net
means you have the option to defer taxes on your
income of $180,000 in 2015. She could contribute up
rental income until distributions.
to $18,000 under salary deferral contributions along with profitsharing contributions of $35,000, cutting
You will have to purchase the property through your
her taxable income by $53,000 in 2015. It is
Solo 401 k plan, and if there are insufficient funds in
important to consider that although 25% of her
your account, you can use nonrecourse financing to
business income is$45,000, Melinda can only
fund the transaction. Unlike IRA plans, the use of
contribute up to $35,000, as the maximum
nonrecourse financing through a Solo 401 k plan
contribution limit comes into play.
does not trigger any additional tax. Make sure that the maintenance cost of the property goes through
Case II: Bob, 53 years, operates as a parttime real
your retirement account only, and the rental income
estate professional, generating an income of $60,000
comes directly into the plan as well.
SOLO 401K: A TAX SAVING STRATEGY FOR REAL ESTATE INVESTORS DMITRIY FOMICHENKO
A large part of our clientele is involved in rental
Every now and then we hear real estate success
property investment, including single family homes,
stories from our clients but this one was even
multifamily apartments, and even commercial real
beyond our imagination.
estate. Investing in a rental property with your retirement plan can help you restrict your tax
One of our clients,
burdens while offering the benefits of real estate
Bill, invested in an
investing.
organic
mango
farm in Panama, • Taxdeferred growth of rental income
spread across 2.5
• Ability to finance property purchase using non
acres, and it was
recourse loan without paying UBIT tax
managed by a local
• Retirement account pays for maintenance experienced
turnkey operation company. His next investment came out to be a Neem tree farm in Brazil, and he
Pay Taxes on Capital Gains at the time of Withdrawals Only
was able to make these investments with a self directed Solo 401 k plan. Any income procured from these farms in the future will directly go into the self
The same rules apply to the capital gains realized
directed account.
from the sale of a property within your Solo 401 k plan. Unlike regular real estate transactions, you can
A selfdirected Solo 401 k plan helps you in creating
defer taxes on your capital gains to as far as your
a diversified retirement portfolio while offering
withdrawals. It allows you to keep the entire gains
complete freedom in asset selection. It is time to
within your plan, and these funds are available for
leverage your retirement savings and build a
your upcoming real estate transactions.
retirement account that will truly outlast you.
Dmitriy Fomichenko Dmitriy Fomichenko is President and Founder of Sense Financial, a leading provider of retirement accounts with "Checkbook Control": the Solo 401k and the Checkbook IRA. To learn more about the Solo 401k plan, please visit sensefinancial.com or email us at info@sensefinancial.com.
HERE'S THE CAPITAL YOU NEED DANA BERSCH
Here’s The Capital You Need By Dana Bersch
T
here’s a whole buffet
estate investors. The catch is that
The data shows that most
of real estate deals out
“you need the money to take
businesses fail because they just
there. With powerful
advantage of those opportunities,
run short of cash flow. They can
unsecured credit lines
and good deals simply won’t wait
no longer pay the bills, push out
for you to find the money.”
great marketing, or seize on the
from Stonebridge Capital Group you can cherry pick the deals you want ondemand.
best opportunities. Some fail
The Biggest Problem You Face Today
At Stonebridge Capital, we don't
because they don’t appreciate their need for funding, or how much they need. Others are stuck
believe you need a winning lottery
The most pressing issue on the
with rigid funding sources and
ticket to realize your financial
current landscape isn’t a lack of
arrangements that don’t serve
dreams. There is a constantly
deals, buyers, or renters, “the
them well, or simply haven’t found
moving “good luck conveyor belt”
biggest problem facing business
an attractive source of financing.
in front of today’s business
owners today is a lack of access to
Ultimately the main source of
owners, entrepreneurs, and real
capital.”
failure is all about the money.
HERE'S THE CAPITAL YOU NEED DANA BERSCH
This credit is working capital that real estate investors, entrepreneurs, and business owners can use for just about anything they need. That means acquiring new properties, down payments, paying down high interest
debt,
rehab
work,
marketing, filling the gaps when tenants are late on rent, etc. Credit lines offer a huge advantage to real estate professionals. You only pay on the money you are actively using, it helps you qualify for the mortgage or hard money We are constantly reminding all real estate investors and entrepreneurs
loan, covers expenses while you
that they are in business. “Flipping houses is a business.” So is acquiring
are involved in your rehab, and
and operating rentals, wholesaling, and note investing, and so on.
once you cash out on deals and pay it down, the money is right
I know the challenges these entrepreneurs face well. As a business
there to use again, without all the
owner for more than 30 years, I understand the pitfalls small businesses
application and appraisal hassles
have in having access to capital, which is critical for their success.
and expenses.
Before I started Stonebridge Capital in 2006, I was involved in several industries, including manufacturing, healthcare, restaurants, real estate,
We receive a sizable portion of our
oil and gas investments, and entertainment.
business from referrals from mortgage brokers and hard money
Over the last decade, the Stonebridge team has been working with
lenders for clients who need to
hundreds of entrepreneurs, investors, and business owners to help them
increase their down payment to
recognize their need for additional capital, position themselves to obtain
qualify for their loan and to bridge
the best funding, and get generous lines of credit.
the funding gap from what they provide too. Additionally using an
The Unsecured Credit Line Advantage
unsecured line of credit means no liens on your properties, and never
Stonebridge Capital specializes in providing business and personal lines
diluting your business ownership
of credit from $25k to $250k. We also have access to bank term loans,
or giving up control as with equity
which can add to the amount of funding.
fundraising.
HERE'S THE CAPITAL YOU NEED DANA BERSCH
Features to Love: • Funding in just 10 to 21 days • 24 hour preapproval • No application fee • 0% interest for up to 24 months • Stated income • New startups OK • 680+ FICO score • Free guidance on maintaining, optimizing, and growing your credit
Don’t Prejudge Your Credit If an extra $250,000 could help your business (and you can bet it can), “don’t prejudge your credit.” There are no application fees, and you can find out how much of a line you can get within 24 hours. Check it out and get preapproved online at www.sbcapgroup.com/sb or call 480.626.1772.
EXPERTS TO DISCUSS CALIFORNIA'S REAL ESTATE BUBBLE AND DIGITAL DISRUPTION AT CHARITY EVENT BY THE NORRIS GROUP AARON NORRIS
Experts to Discuss California’s Real Estate Bubble and Digital Disruption at Charity Event Organized by The Norris Group By Aaron Norris
Top officials from Zillow, Fannie Mae, National Association of Hispanic Real Estate Professionals, and PropertyRadar join real estate analyst Bruce Norris on Oct. 21st at the Nixon Presidential Library for The Norris Group’s 9th annual “I Survived Real Estate” charity gala
Y
ORBA LINDA, Calif., Aug. 16, 2016 – Real estate professionals in California wait on pins and needles as they navigate California’s unusual real estate market. Prices continue to increase under the pressure of recordlow housing supply, lifetimelow interest rates, and bullish demand. How high can California go? Is a crash inevitable in 2017?
EXPERTS TO DISCUSS CALIFORNIA'S REAL ESTATE BUBBLE AND DIGITAL DISRUPTION AT CHARITY EVENT BY THE NORRIS GROUP AARON NORRIS
“Some California markets have blown through their past peak prices,” says Bruce Norris, President of The Norris Group and host of I Survived Real Estate. “Distressed inventory has been replaced by sellers with equity, institutional buyers have moved on to greener pastures, and interest rates could start with a two in the year ahead. Our network is nervous and increasingly cautious.” Norris says the US has never experienced such anemic GDP growth in combination with an unemployment rate so low. Real estate
professionals
are
watching
affordability numbers descend at a time when wage growth has stagnated, the political environment has people playing conservative, and even extremely qualified borrowers struggle to get financing. Add to that the fear that technology will displace many pieces of the real estate industry and it’s no wonder industry professionals are concerned. Norris has assembled a panel of real estate experts to address the current state of real estate and its implications for consumers and real estate professionals during his 9th annual “I Survived Real Estate” charity gala on Friday, October 21, at the Nixon Presidential Library in Yorba Linda. Other topics of discussion will include digital disruption in real estate, California buyer demographics, Millennial and Baby Boomer ownership trends, and the forecast for a postelection real estate market. Expert panelists scheduled for this year’s “I Survived Real Estate” charity gala include: •
Nick Bailey, VP of Zillow
•
Gary Acosta, CEO of National Hispanic Association of Realtors
•
John Burn, John Burns Real Estate Consulting
•
Doug Duncan, Chief Economist of Fannie Mae
•
Sean O’Toole, CEO of PropertyRadar.com
•
Bruce Norris, President of The Norris Group
Proceeds from the Oct. 21st “I Survived Real Estate” event will be donated to MakeAWish® Orange County and the Inland Empire, and to St. Jude Children’s Research Hospital. The event has raised over $600,000 for charity in the past eight years.
EXPERTS TO DISCUSS CALIFORNIA'S REAL ESTATE BUBBLE AND DIGITAL DISRUPTION AT CHARITY EVENT BY THE NORRIS GROUP AARON NORRIS
On Saturdays leading up to the event, Norris will interview an “I Survived Real Estate” panelist or local expert about current market conditions within that expert’s area of expertise. Norris regularly interviews economists, government officials, association presidents and other industry thought leaders on his weekly real estate radio talk show, which airs at 6 p.m. Saturdays on KTIE 590 AM in San Bernardino. Podcasts of Norris’s radio interviews can be accessed through his company website, www.thenorrisgroup.com.The Norris Group is a Californiabased hard money lender and real estate investment firm. “I Survived Real Estate” has more than 25 sponsors, including HousingWire, PropertyRadar, the Apartment Owners Association, InvestCLUB for Women, the San Jose Real Estate Investors Club, Think Realty, the San Diego Creative Investors Association, MVT Productions, and White House Catering. For tickets and other information regarding the Oct. 21st event, visit www.isurvivedrealestate.com. Reporters seeking interviews with Bruce Norris and panel participants before or after the event should contact Aaron Norris at (646) 4184437.
Aaron Norris (646) 4184437 aaron@thenorrisgroup.com
SKYROCKETING INFLATION, RENTS, AND HOME PRICES RICK TOBIN
Skyrocketing Inflation, Rents, and Home Prices By Rick Tobin
T
he National Low Income Housing Coalition (NLICH) released a study on May 25, 2016 which reported the following absolutely mindboggling information: “In no state, metropolitan area or county in the United States can a fulltime worker earning the prevailing minimum wage afford a modest twobedroom apartment.”
SKYROCKETING INFLATION, RENTS, AND HOME PRICES RICK TOBIN
Today’s Skyrocketing Prices in 2016 The Top 5 most expensive states for tenants to qualify based upon their fulltime hourly income rates are as follows: • Hawaii, with a twobedroom housing
This data was based upon the fact that a person
wage of $34.22
would have a fulltime job for at least 40 hours per week and would spend less than 30% of their household income on rent and utilities for a modest
• California, with a two bedroom housing
• New York, with a twobedroom housing
apartment unit in the U.S. Per the NLICH, it would be
wage of $26.69
just about impossible for one fulltime worker with a
• Maryland, with a twobedroom housing
minimum wage to find a simple one or twobedroom
wage of $26.53
apartment. The same report noted that a fulltime worker would need to earn $20.30 per hour to barely afford an average quality twobedroom apartment. This number is over $5 higher than the average hourly wage of U.S. renters who earn $15 per hour. To qualify for an even smaller onebedroom apartment, a fulltime worker would need to earn $16.25 per hour. For workers who earn the current federal minimum wage rate of $7.25 per hour, one would need to work 2.8 fulltime jobs (112 hours per week) for all 52 weeks of the year with no vacation days in order to have sufficient income to qualify for a twobedroom apartment. This same tenant would have very little free time to enjoy life since they would be too busy working 112 hours per week and probably sleeping the rest of the time (8 hours per night or 58 hours of sleep every seven days). There are a grand total of 168 total hours in a week (24 hours x 7 days/week = 168 hours), so this would be a very stressful and challenging week for most people.
wage of $28.59
• New Jersey, with a twobedroom
housing wage of $26.52”
(*Source: http://nlihc.org/press/releases/6845 ) A good example of a pricey California region is Oakland, California where the average twobedroom apartment is $2,100/month. To qualify, a person would need to earn over $84,000 per year. This amount is more than double the average actual income of renters in Oakland today.
SKYROCKETING INFLATION, RENTS, AND HOME PRICES RICK TOBIN
The Top 10 Priciest Housing Regions
5. New York (Queens) Average Rent: $2,390/mo.
Most tenants and homeowners also have food,
Can of Coffee: $5.15
energy, clothing, and other expenses in addition to
Home Price: $636,000
their housing costs. Let’s take a look below at the
Trip to the Beauty Parlor: $54
Top 10 most expensive regions in the U.S. as
Dozen Eggs: $2.41
determined by The Council for Community and Economic Research when factoring in average
6. San Jose, Calif.
income and expenses:
Average Rent: $1,738/mo. Can of Coffee: $6.58
1. New York (Manhattan)
Home Price: $805,000
Average Rent: $3,783/mo.
Trip to the Beauty Parlor: $47
Can of Coffee: $6.14
Dozen Eggs: $2.74
Home Price: $1.36 million Trip to the Beauty Parlor: $68
7. Hilo, Hawaii
Dozen Eggs: $2.89
Average Rent: $928/mo. Can of Coffee: $6.16
2. New York (Brooklyn)
Home Price: $488,500
Average Rent: $2,493/mo.
Trip to the Beauty Parlor: $26
Can of Coffee: $5.13
Dozen Eggs: $3.73
Home Price: $990,500 Trip to the Beauty Parlor: $58 Dozen Eggs: $2.61 3. Honolulu, Hawaii Average Rent: $2,733/mo. Can of Coffee: $7.32 Home Price: $742,600 Trip to the Beauty Parlor: $52 Dozen Eggs: $3.39 4. San Francisco, Calif. Average Rent: $2,925/mo. Can of Coffee: $6.04 Home Price: $820,000 Trip to the Beauty Parlor: $59 Dozen Eggs: $2.86
SKYROCKETING INFLATION, RENTS, AND HOME PRICES RICK TOBIN
8. Stamford, Conn. Average Rent: $2,109/mo. Can of Coffee: $5.18 Home Price: $598,000 Trip to the Beauty Parlor: $55 Dozen Eggs: $2.10 9. Orange County, Calif. Average Rent: $1,778/mo. Can of Coffee: $5.33
Falling Rates & Increasing Home Prices
Home Price: $721,000 Trip to the Beauty Parlor: $60
In 2014, real California household income dropped
Dozen Eggs: $2.19
by 2% from the previous year. Yet, home prices in the Los Angeles and Orange County skyrocketed by
10. Washington D.C.
20% between 2013 and 2014. While Los Angeles
Average Rent: $1,960/mo.
and Orange County, California are two of the most
Can of Coffee: $4.93
expensive regions, there were several other housing
Home Price: $767,000
markets which also experienced 10% to 20%+
Trip to the Beauty Parlor: $51
annual home appreciation price trends in spite of
Dozen Eggs: $2.36
stagnant or falling jobs and income numbers. How is this possible? ANSWER: The combination of
(*Source above: The Council For Community And
near record low mortgage rates and fewer places to
Economic Research Cost of Living Index
buy or lease are boosting demand, sales prices, and
http://coli.org/ )
monthly lease payments.
(Source: Federal Reserve Economic Data – St. Louis Fed: https://fred.stlouisfed.org/ )
SKYROCKETING INFLATION, RENTS, AND HOME PRICES RICK TOBIN
The financial chart above from the St. Louis Fed’s Federal Reserve Economic Data team helps to simplify how California home prices widely fluctuated from positive to negative during corresponding national and global “boom and bust cycles” such as Black Monday (October 19, 1987) when the Dow Jones lost over 22% of its overall market value in just one day, the Savings and Loan Crisis (1980s to mid1990s), the Telecommunications and DotCom Busts (near 2000), The Credit Crisis (August 2007 onward), and the Federal Reserve’s almost eight plus years of pushing bailout programs like Quantitative Easing (or “create money out of thin air to buy up stocks, bonds, and mortgages so that asset prices increase and interest rates decline to record low levels”). Amazingly, incomes in California and the U.S. have been relatively flat over the past few decades. The housing market effectively last peaked at a market high in 2006 in many parts of the U.S. While there are some regions of the U.S. today with even higher peak median home prices such as in prime coastal or metropolitan regions, the vast majority of home prices are either right near or still below their last market price peak a full decade ago in 2006. Dating back to the official start of “The Credit Crisis” in August 2007, anywhere between an estimated seven to 10 million American families lost their homes due to foreclosure, per various wide ranging housing reports. Upwards of one million California households alone reportedly lost their homes over the past decade to foreclosure. Between 2005 and 2016, the number of new renter households increased by over nine million; this increased demand for rental units also pushed rental prices upward dramatically during the past decade.
The Cost of Living 20 Years Ago in 1996 20 years ago, the numbers were significantly more reasonable than today and a decade ago (2006): * Annual Inflation Rate: 2.93% * The Year End Close for the Dow Jones: 6,448 * Average New Home Price: $118,200 * Average Monthly Rent Nationwide: $554 * A Gallon of Gas: $1.22 * U.S. Postage Stamp: 32 cents * Average Car Price: $16,300 * Minimum Wage: $5.15
2006
(*Source above: www.thepeoplehistory.com/1996.html )
SKYROCKETING INFLATION, RENTS, AND HOME PRICES RICK TOBIN
One of the most basic theories of economics is Supply and Demand. The more consumers who demand an asset like a home or apartment, the more likely that the asset will increase in price. Conversely, falling demand for a product, service, or asset will likely lead to falling prices. If you want to create wealth while staying ahead of skyrocketing inflation, buying real estate has historically proven to be an exceptional strategy. Real estate works hard creating new wealth for owners by riding the “inflation wave” instead of us working too hard just to make ends meet.
Rick Tobin Look for Rick's ebook on Amazon Kindle: The Credit Crisis Deals: Finding America's Best Real Estate Bargains. Rick Tobin has a diversified background in both the Real Estate and Securities fields for the past 25+ years. He has held seven (7) different Real Estate and Securities brokerage licenses to date. Rick has an extensive background in the financing of residential and commercial properties around the U.S with debt, equity, and mezzanine money. His funding sources have included banks, life insurance companies, REITs (Real Estate Investment Trusts), Equity Funds, and foreign money sources. You can visit Rick Tobin at http://www.realloans.com/
Be an REI Wealth Monthly M a g a z in e C o n t r ib u t o r
REI Wealth Monthly EARNINGS DISCLAIMER The information presented in this Magazine is intended to be for your educational and entertainment purposes only. We make no claims as to any income you may earn. We are not presenting you with an opportunity to get rich. Third party information, products and services are included in this magazine. We make no representation or warranties regarding the performance, effectiveness, accuracy, applicability or completeness of any of the information, products or services, in this magazine, including that from third parties. There are unknown risks in any endeavor that are not suitable for everyone. Before proceeding with any of the information in this magazine, please use caution and seek the advice of a competent attorney, accountant, tax advisor or other professional, as applicable. Where income figures are mentioned (if any), those income figures are anecdotal information passed on to us concerning the results achieved by the individual sharing the information. We have performed no independent verification of the statements made by those individuals. Please do not assume that you will make those same income figures. Please do not construe any statement or testimonial of individuals in this magazine as a claim or representation of average earnings. There are NO average earnings. We cannot, do not, and will not make any claims as to earnings, average, or otherwise. Please understand that past performance is not an indication of possible future results. Success in any endeavor is based on many factors individual to you. We do not know your educational background, your skills, your desire, your prior experience or expertise, or the time and resources you can and will devote to the endeavor. Please perform your own due diligence before embarking on any course of action. Follow the advice of your personal qualified advisors. You agree that our company is not liable for any success or failure directly related to the purchase or use of information, products, or services in this magazine. There is no guarantee that you will earn any money or achieve any results at all from the ideas, products or services presented in our magazine. Examples in our materials are not to be interpreted as a promise or guarantee of earnings. Many factors will be important in determining your actual results and no guarantees are made that you will achieve results similar to ours or anybody else’s. You agree that we will not share in your success, nor will we be responsible for your failure or for your actions in any endeavor you may undertake. Materials in our magazine or website may contain information based upon forwardlooking statements within the meaning of the securities litigation reform act of 1995. Forwardlooking statements give our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with a description of potential earnings or financial performance. Any and all forward looking statements in our materials are intended to express our opinion of earnings potential and should not be relied upon as fact.
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